The European Securities and Markets Authority (ESMA) has conducted a peer review on how national regulators (national competent authorities or NCAs) supervise and enforce the MiFID provisions relating to investment firms’ obligation to provide best execution, or obtain the best possible result, for their clients when executing their orders.
ESMA found that the level of implementation of best execution provisions, as well as the level of convergence of supervisory practices by NCAs, is relatively low. In order to address this situation a number of improvements were identified, including:
• prioritisation of best execution as a key conduct of business supervisory issue;
• the allocation of sufficient resources to best execution supervision; and
• a more proactive supervisory approach to monitoring compliance with best execution requirements, both desk-based and onsite inspections.
The review was conducted on the basis of information provided by 29 NCAs and complemented by on-site visits to the NCAs of France, Liechtenstein, Luxembourg, Malta, Poland and Spain.